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High prices, depleted reserves, and limited incomes affect food security

  • Remote Monitoring Report
  • Latin America and the Caribbean
  • October 2014
High prices, depleted reserves, and limited incomes affect food security

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  • Key Messages
  • Agriculture and Livestock Production
  • Coffee Sector
  • Grain Market Behavior
  • Food Assistance Programs
  • Projected Regional Outlook through March 2015
  • Key Messages
    • In Honduras, repeated shocks to staple grain crops, including losses of this year’s Primera crops, rises in staple food prices, and limited employment opportunities in the coffee sector will lead poor households to be Stressed (IPC Phase 2) between October 2014 and March 2015.

    • In Nicaragua, poor households in livelihood zone 3 (northwest subsistence agriculture, livestock, and alternative livelihoods zone) will receive food assistance between October and December and will be in Minimal (IPC Phase 1!) food insecurity. However, due to production shortfalls, rising prices, and limited employment opportunities, they will be Stressed (IPC Phase 2) from January through March.

    • In El Salvador, poor households in livelihood zones 2 (coffee, agroindustrial, and wage labor zone) and 4 (eastern staple grains, labor, livestock, and remittance zone) will experience Minimal (IPC Phase 1!) food insecurity between October 2014 and March 2015 with the help of humanitarian assistance. High staple grain prices and limited incomes from coffee-related activities in zone 2 will affect poor households in these areas.

    • ENSO forecasts released by the IRI (International Research Institute) in mid-October show a 66 percent probability of the development of El Niño conditions between November and January, which could produce below-normal levels of rainfall, posing a risk of damage to Apante crops (between January and March), mainly in Atlantic Coast production areas of Nicaragua y Honduras.

    COUNTRY

    CURRENT ANOMALIES

    PROJECTED ANOMALIES

    HONDURAS

    Stabilization of bean prices at high levels and slight decline in maize prices.

    Continuing high prices for staple grains on account of the losses to Primera crops and the potential for damage to Postrera and Postrera Tardía crops.

    Damage to Postrera crops as a result of the delay in crop planting activities and end-of-season rainfall anomalies.

    NICARAGUA

    Reduced flow of crops to market due to the damage to Primera crops, keeping grain prices high.

     

    Fewer local employment opportunities due to the damage to crop and animal production (peanuts, bananas, citrus fruits, livestock).

    High risk of losses of Postrera crops due to excessive rainfall or a shortened rainy season in high-production areas for Postrera and Apante crops

     

    EL SALVADOR

    Steady rise in bean prices in spite of government imports and the first shipments of  Primera crops to market, and very slight decline in maize prices.

    Losses to Primera crops.

    New era of high grain prices, with shifts in the pattern of regional trade, due to crop losses or reduced yields.

     

    Possible damage to harvests of Postrera crops from excessive rainfall.

     


    Agriculture and Livestock Production

    HONDURAS: Contrary to previous forecasts, rainfall during September and October has been average to above-average across most of the Central America region (Figure 1). However, there was a break in the rains during the first ten days of October in crop-producing areas of eastern Honduras, which may have affected certain Postrera crops. However, in most of this region, planting for Postrera takes place after October 20th, such that a dry spell in that part of the country could cause damage to Postrera crops.

     NICARAGUA:  Planting activities for Postrera crops in the country’s Dry Corridor (Estelí, Madriz, Nueva Segovia, Matagalpa, León, and Chinandega) got underway sometime between the first and fourth weeks of September. In many cases planting was delayed by the rainfall anomalies in the second half of August, the limited availability of seeds for the planting of these crops, the high cost of farm inputs, and the farmers’ lack of funding. The excessive rainfall in the first half of October may have affected Postrera crops in certain areas.

    According to INETER (the Geosciences Institute), there was a slight cumulative rainfall deficit in September, with cumulative rainfall totals for the month of October expected to show an improvement over previous months. The rains are expected to taper off at the end of October, with the dry season getting underway by the first week of November, though there could be continued rainfall activity in humid areas of the North and South Atlantic Autonomous Regions and extremely mountainous areas of the country’s Northern and Central Regions. The excessive rainfall in the first half of October affected some 37 municipalities in 13 departments.

     EL SALVADOR: Rainfall levels in eastern and western areas of the country are within normal ranges for the Postrera growing season, which is conducive to crop growth and development (Figure 1). 


    Coffee Sector

    The coffee harvest got underway in the second week of October in many coffee-producing areas in the countries of the region. Expected improvements in coffee production and international prices should help increase labor demand.

    The progress of the growing season is expected to jump-start the coffee sector, with the rust outbreak under better control, the positive biannual nature of coffee production, and the rebound in international prices, which should help the coffee sector reestablish itself as one of the largest generators of agricultural Gross Domestic Product (GDP) and employers of the economically active population in each country. Estimates for the 2014/2015 season (Figure 2) show an improvement in production levels over last season, primarily in areas where coffee growers invested in rehabilitating their plantations, which should start producing coffee as of this year, though the rebound in coffee production will still not reach the production levels of 2011/2012.

     


    Grain Market Behavior

    As illustrated in Figure 3, crop failures and shortfalls in regional production for last season adversely affected market bean supplies, impacting regional pricing systems since the beginning of this year. These trends were perpetuated by the losses of this year’s Primera crops. In the case of Honduras and Nicaragua, the pattern began to reverse itself with an inflow of imports and the harvest of Primera crops. Current price levels could come down at the end of the year with a good harvest of Postrera crops.

    In El Salvador, based on current price behavior and with the continued availability of 77 percent of the authorized import quota, the government could extend the period of the authorized quota until December. At the same time, it is examining the possibility of going back to the Price Band system, which is a mechanism for the application of differential import duties based on international market prices.

    Honduras has completed its imports of 60,000 quintals of red beans from Ethiopia, which are being stored and distributed by the IHNMA, the National Crop Marketing Agency (Instituto Hondureño de Mercadeo Agrícola), part of which has been shipped to its facilities in Dalí (El Paraíso) to meet demand from residents of the country’s eastern and southern areas. These imports should be able to meet domestic market needs through November.

     


    Food Assistance Programs

    In September, the U.S. Agency for International Development (USAID) approved a US$10 million appropriation for the delivery of emergency food assistance through the WFP to approximately 220,000 recipients in the Central American region in targeted communities in Guatemala, Honduras, and El Salvador. The goal of this operation is to prevent an erosion in the livelihoods and food security of these households, to which end the WFP will give priority to poor households at risk for food insecurity in Honduras and El Salvador, to which it is allocating US$4 million and US$1 million, respectively.

     HONDURAS: COPECO, the Standing Contingency Commission (Comisión Permanente de Contingencias), has identified over 186,000 households affected by drought-induced losses of Primera crops in 165 municipalities across the country. In response, the Technical Interagency Drought Risk Management Committee (Comité Técnico Interinstitucional para la Gestión de Riesgo por Sequía) comprised of members of the country’s National Risk Management System (SINAGER) has formulated a Drought Action Plan. The WFP is in the process of conducting surveys in affected areas as part of an Emergency Food Security Assessment (EFSA) in conjunction with the Honduran government’s Technical Food and Nutritional Security Unit (UTSAN), the FAO, and other NGOs.

     The Japanese government will provide the World Food Program (WFP) with US$500,000 in funding for the provision of food assistance to 3,600 drought-stricken households in southern Honduras, to be distributed in the form of food-for-work rations in the departments of Choluteca and El Paraíso. The government of Taiwan is donating US$146,000 to support implementation of the Action Plan for Drought-Induced Food Insecurity adopted by the government in the first half of the year to deal with drought-induced losses of staple grain crops.

     NICARAGUA: Government assistance for drought-stricken households in Nicaragua is being coordinated with the WFP. To date, 46,000 food packages providing one-month rations have been distributed to households in 66 municipalities in nine departments. The US$800,000 grant from the government of the Republic of Taiwan in support of the 2014 National Agri-Food (Zero Hunger) Program will help some 1,725 households. Other grants of cooperation assistance will be used to buy food for food assistance programs for rural households with limited food access due to natural phenomena and/or economic crises.

    EL SALVADOR: The WFP is conducting several programs in this country. The PRRO-Roya project will provide 583 households with food vouchers between July and December. It also distributed food assistance to 9,514 households in San Miguel, Usulután, La Libertad, Santa Ana, Sonsonate, and Ahuachapán as part of the PRRO-Roya project between August and October. The USAID-funded PROGRESANDO project will provide food vouchers to 8,200 households in the departments of La Libertad, Santa Ana, Sonsonate, Ahuachapán, Cuscatlán, La Paz, Morazán, and Chalatenango for a six-month period (November through April), which should meet the needs of high-risk households for food insecurity through April.


    Projected Regional Outlook through March 2015

    In Honduras, the combined effects of the recurrent droughts and resulting crop failures, rising prices of staple foods, and limited employment opportunities in the coffee sector will lead poor households to Stressed (IPC Phase 2) outcomes between October and March. Communities in livelihood zones 7 (subsistence staple grains and remittances) and 5 (coffee-growing mountainous area) will face the most severe levels of food insecurity. These households identified as part of the government’s Action Plan for Drought-Induced Food Insecurity are targeted for food assistance on account of their heavy losses of Primera crops, their limited employment opportunities for generating income, and their reliance on leased lands, mostly with degraded low-yielding soils, for the planting of Postrera crops.

    In Nicaragua, poor households in livelihood zone 3 (northwest subsistence agriculture, livestock, and alternative livelihoods zone) will receive food assistance between October and December on account of their losses of Primera crops, depleted food reserves, and limited employment opportunities, and are expected to be in Minimal (IPC Phase 1!) food insecurity. However, with recurrent droughts eroding their livelihoods, the lack of local employment opportunities, the rising price of food, and the lack of food assistance, they will be facing Stressed (IPC Phase 2) levels of food insecurity between January and March.

    In El Salvador, poor households in livelihood zone 2 (coffee, agroindustrial, and wage labor zone) will continue to experience Minimal (IPC Phase 1!) food insecurity between October and March with the help of humanitarian assistance necessitated by their dependence on employment in the coffee sector which, though recovering, has not achieved the same level of production efficiency in the aftermath of the rust outbreak and, thus, will continue to offer only limited job prospects for this group of households.

    Figures Rainfall estimates as a percentage of the average, September 13 – October 12, 2014

    Figure 1

    Rainfall estimates as a percentage of the average, September 13 – October 12, 2014

    Source: NOAA/FEWS NET

    Coffee production across the region (in 46 kg sacks)

    Figure 2

    Coffee production across the region (in 46 kg sacks)

    Source: PROMECAFE

    Average September wholesale prices for red beans across the region

    Figure 3

    Average September wholesale prices for red beans across the region

    Source: FEWS NET

    Figure 4

    Source:

    In remote monitoring, a coordinator typically works from a nearby regional office. Relying on partners for data, the coordinator uses scenario development to conduct analysis and produce monthly reports. As less data may be available, remote monitoring reports may have less detail than those from countries with FEWS NET offices. Learn more about our work here.

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